Here are some typical Itemized deductions that you may be qualified for:
Medical expenses - Medical expenses in excess of 10% of AGI are deductible as itemized deductions. If you or your spouse is age 65 or older by year end, you may deduct medical expenses in excess of 7.5% of AGI. Medical expenses are deductible in the year paid.
Taxes - State and local income taxes as well as real estate taxes for all property owned are deductible in the year paid. In years past you could deduct the larger of state income taxes or sales taxes. The sales tax deduction provision expired at the end of 2013 but there may be some changes to this as congress is expected to pass a last minute extender bill which MAY address this issue. Most income taxes paid to a foreign country or US possession are either deductible as an itemized deduction or can be taken as a credit against tax.
Mortgage interest - Mortgage interest paid is deductible, with limitations. Mortgage interest is deductible on up to two homes with a combined secured acquisition debt of $1.1 million. Home equity debt is generally limited to $100,000. Points on the purchase or a refinance to make major improvements are deductible, but they may need to be amortized over the life of the loan.
The second home for purposes of this deduction can be a vacation home or even a motor home or boat. To qualify as a home it must have sleeping, cooking and toileting facilities. Interest on a home that you rent out, well, that’s a whole different story and will require a separate blog entry.
Charitable contributions - Generally you may deduct amounts given to qualifying charities with certain limitations. Qualifying organizations have tax exempt status granted by the IRS under section 501(c)(3). Gifts to individuals are never deductible. If your contribution entitles you to merchandise, goods, or services, including admission to a charity ball, banquet, theatrical performance, or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received. Most contributions will be limited to 50% of your AGI. Non cash contributions will generally be limited to the fair market value of the item donated. In some instances they may be limited to your cost. Be sure to provide your preparer sufficient detail to determine the type of asset donated so that they can apply the proper limitations. (See our Resources page for a tool to help you value your non-cash charitable contributions).
It’s important that you have the proper documentation to support your charitable contributions as the IRS has strict rules in this area. You must have written substantiation for all contributions. If less than $250 is given at one time, a bank draft is sufficient. If the gift is $250 or greater, a written acknowledgement of receipt from the charity is required.
Casualty and theft losses - A casualty is defined as damage, destruction, or loss of property resulting from an identifiable event that was sudden, unexpected, or unusual. Casualty and theft losses can be deductible if they are not reimbursed by insurance. However, because of the following limitations, we do not see a lot of them. The losses are subject to a $100 "floor" amount and are further reduced by 10% of your AGI per loss.
Miscellaneous deductions - Miscellaneous itemized deductions include expenses incurred for generating or protecting income, investment advisory fees, unreimbursed employee business and other job related expenses to name a few. Expenses in this category are deductible only to the extent that they exceed of 2% of your AGI.
Other miscellaneous deductions - There are some miscellaneous itemized deductions that are not subject to the 2% of AGI reduction. Some examples are gambling losses up to the amount of gambling winnings, and special job-related expenses of the disabled.
Be sure to let your tax advisor know if you feel you could be eligible for any of these deductions. There are sections for these expenses on our tax organizer. If you do not see your particular section, please attach a note
Medical expenses - Medical expenses in excess of 10% of AGI are deductible as itemized deductions. If you or your spouse is age 65 or older by year end, you may deduct medical expenses in excess of 7.5% of AGI. Medical expenses are deductible in the year paid.
Taxes - State and local income taxes as well as real estate taxes for all property owned are deductible in the year paid. In years past you could deduct the larger of state income taxes or sales taxes. The sales tax deduction provision expired at the end of 2013 but there may be some changes to this as congress is expected to pass a last minute extender bill which MAY address this issue. Most income taxes paid to a foreign country or US possession are either deductible as an itemized deduction or can be taken as a credit against tax.
Mortgage interest - Mortgage interest paid is deductible, with limitations. Mortgage interest is deductible on up to two homes with a combined secured acquisition debt of $1.1 million. Home equity debt is generally limited to $100,000. Points on the purchase or a refinance to make major improvements are deductible, but they may need to be amortized over the life of the loan.
The second home for purposes of this deduction can be a vacation home or even a motor home or boat. To qualify as a home it must have sleeping, cooking and toileting facilities. Interest on a home that you rent out, well, that’s a whole different story and will require a separate blog entry.
Charitable contributions - Generally you may deduct amounts given to qualifying charities with certain limitations. Qualifying organizations have tax exempt status granted by the IRS under section 501(c)(3). Gifts to individuals are never deductible. If your contribution entitles you to merchandise, goods, or services, including admission to a charity ball, banquet, theatrical performance, or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received. Most contributions will be limited to 50% of your AGI. Non cash contributions will generally be limited to the fair market value of the item donated. In some instances they may be limited to your cost. Be sure to provide your preparer sufficient detail to determine the type of asset donated so that they can apply the proper limitations. (See our Resources page for a tool to help you value your non-cash charitable contributions).
It’s important that you have the proper documentation to support your charitable contributions as the IRS has strict rules in this area. You must have written substantiation for all contributions. If less than $250 is given at one time, a bank draft is sufficient. If the gift is $250 or greater, a written acknowledgement of receipt from the charity is required.
Casualty and theft losses - A casualty is defined as damage, destruction, or loss of property resulting from an identifiable event that was sudden, unexpected, or unusual. Casualty and theft losses can be deductible if they are not reimbursed by insurance. However, because of the following limitations, we do not see a lot of them. The losses are subject to a $100 "floor" amount and are further reduced by 10% of your AGI per loss.
Miscellaneous deductions - Miscellaneous itemized deductions include expenses incurred for generating or protecting income, investment advisory fees, unreimbursed employee business and other job related expenses to name a few. Expenses in this category are deductible only to the extent that they exceed of 2% of your AGI.
Other miscellaneous deductions - There are some miscellaneous itemized deductions that are not subject to the 2% of AGI reduction. Some examples are gambling losses up to the amount of gambling winnings, and special job-related expenses of the disabled.
Be sure to let your tax advisor know if you feel you could be eligible for any of these deductions. There are sections for these expenses on our tax organizer. If you do not see your particular section, please attach a note
RSS Feed